Question 1

Briefly explain the economic concept of elasticity.

Accepted Answer

Elasticity is a measure of how

Question 2

Which of the following items is likely to have the highest income elasticity of demand?

Accepted Answer

A) a luxury cruise to several European countries 
B) water 
C) breakfast cereal 
D) a hamburger 
A) a luxury cruise to several European countries 
B) water 
C) breakfast cereal 
D) a hamburger

Question 3

Table 6-6
  
-Refer to the Article Summary above.How would the NFL know if it was operating on the elastic portion of the demand curve for Super Bowl tickets?

Accepted Answer

A) If they increased ticket prices and the total revenue from ticket sales increased. 
B) If they increased ticket prices and the total revenue from ticket sales did not change. 
C) If they increased ticket prices and the total revenue from ticket sales decreased. 
D) If they decreased ticket prices and the total revenue from ticket sales did not change. 
A) If they increased ticket prices and the total revenue from ticket sales increased. 
B) If they increased ticket prices and the total revenue from ticket sales did not change. 
C) If they increased ticket prices and the total revenue from ticket sales decreased. 
D) If they decreased ticket prices and the total revenue from ticket sales did not change.

Question 4

Consider the following pairs of items:
A.shampoo and conditioner
B.iPhones and earbuds
C.a laptop computer and a desktop computer
D.beef and pork
E.air-travel and weed killer
Which of the pairs listed will have a negative cross-price elasticity?

Accepted Answer

A) a and b only 
B) c and d only 
C) e only 
D) a, b, and c only 
A) a and b only 
B) c and d only 
C) e only 
D) a, b, and c only

Question 5

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then

Accepted Answer

A) the price elasticity of demand for teapots is greater than 1 in absolute value. 
B) the demand for teapots is unit elastic. 
C) the price elasticity of demand for teapots is equal to zero. 
D) the price elasticity of demand for teapots is less than 1 in absolute value. 
A) the price elasticity of demand for teapots is greater than 1 in absolute value. 
B) the demand for teapots is unit elastic. 
C) the price elasticity of demand for teapots is equal to zero. 
D) the price elasticity of demand for teapots is less than 1 in absolute value.

Question 6

Table 6-6
  
-Refer to Table 6-6.Based on the data in the table, between a price of $9.99 and $14.99, the demand for books is

Accepted Answer

A) elastic. 
B) unit elastic. 
C) inelastic. 
D) perfectly inelastic. 
A) elastic. 
B) unit elastic. 
C) inelastic. 
D) perfectly inelastic.

Question 7

Figure 6-10
  
-Refer to Figure 6-10.The supply curve on which price elasticity changes at every point is shown in

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D.

Question 8

Which of the following items is likely to have the highest income elasticity of demand?

Accepted Answer

A) a bus ride 
B)  a meal at Taco Bell 
C) a vacation home in the Swiss Alps 
D) a tank of gasoline 
A) a bus ride 
B)  a meal at Taco Bell 
C) a vacation home in the Swiss Alps 
D) a tank of gasoline

Question 9

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that

Accepted Answer

A) an increase in the price of beer will increase the quantity demanded of beer and beer is a normal good. 
B) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good. 
C) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. 
D) an increase in the price of beer will lead to a decrease in the quantity demanded of beer and beer is a luxury. 
A) an increase in the price of beer will increase the quantity demanded of beer and beer is a normal good. 
B) an increase in the price of beer will lead to an increase in revenue for beer sellers and beer is a normal good. 
C) a decrease in the price of beer will lead to an increase in revenue for beer sellers and beer is an inferior good. 
D) an increase in the price of beer will lead to a decrease in the quantity demanded of beer and beer is a luxury.

Question 10

An article in the Wall Street Journal noted the following: Instead of relying on a full-coach, round-trip unrestricted fare of about $2,000 between Cleveland and Los Angeles ...Continental [Airlines] since June has offered a $716 unrestricted fare in that market ....Through October, the test resulted in about the same revenue that Continental thinks it would have collected with its higher fare.
Source: Scott McCartney, "Airlines Try Cutting Business Fares, Find They Don't Lose Revenue," Wall Street Journal, November 22, 2002.
What is the absolute value of the price elasticity of demand on this airline route?

Accepted Answer

A) 0 
B) less than 1 
C) greater than 1 
D) approximately 1 
A) 0 
B) less than 1 
C) greater than 1 
D) approximately 1

Question 11

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

Accepted Answer

A) A wide variety of substitutes are available for the good. 
B) The time period under consideration is short. 
C) The good is a necessity. 
D) The expenditure on the good is small relative to one's budget. 
A) A wide variety of substitutes are available for the good. 
B) The time period under consideration is short. 
C) The good is a necessity. 
D) The expenditure on the good is small relative to one's budget.

Question 12

If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is

Accepted Answer

A) unit elastic. 
B) perfectly elastic. 
C) relatively inelastic. 
D) relatively elastic. 
A) unit elastic. 
B) perfectly elastic. 
C) relatively inelastic. 
D) relatively elastic.

Question 13

The demand for most farm products is relatively inelastic.All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

Accepted Answer

A) Farm revenues increase. 
B) Farm revenues decrease. 
C) Farm revenues remain constant because consumers will not increase their consumption of farm products by much. 
D) Farm revenues could increase or decrease depending on the cost of this new equipment. 
A) Farm revenues increase. 
B) Farm revenues decrease. 
C) Farm revenues remain constant because consumers will not increase their consumption of farm products by much. 
D) Farm revenues could increase or decrease depending on the cost of this new equipment.

Question 14

Between 1950 and 2015, the number of acres devoted to wheat production in the United States ________ and the price of wheat ________.

Accepted Answer

A) declined; decreased 
B) more than doubled; increased by about 50 percent 
C) declined; more than doubled 
D) increased; more than doubled 
A) declined; decreased 
B) more than doubled; increased by about 50 percent 
C) declined; more than doubled 
D) increased; more than doubled

Question 15

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Accepted Answer

A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises. 
A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises.

Question 16

If an 8 percent decrease in the price of lobster leads to a 15 percent decrease in the quantity of lobster supplied, then the supply of lobster is

Accepted Answer

A) unit elastic. 
B) unitarily elastic. 
C) elastic. 
D) perfectly inelastic. 
A) unit elastic. 
B) unitarily elastic. 
C) elastic. 
D) perfectly inelastic.

Question 17

Suppose when the price of jean-jackets increased by 10 percent, the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is

Accepted Answer

A) 0.625. 
B) 6%. 
C) 1.6. 
D) 1.6%. 
A) 0.625. 
B) 6%. 
C) 1.6. 
D) 1.6%.

Question 18

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

Accepted Answer

A) elastic or perfectly inelastic. 
B) elastic or perfectly elastic. 
C) unit elastic. 
D) perfectly inelastic. 
A) elastic or perfectly inelastic. 
B) elastic or perfectly elastic. 
C) unit elastic. 
D) perfectly inelastic.

Question 19

If the quantity of walkie-talkies supplied increases by 5 percent when price increases by 12 percent, then

Accepted Answer

A) the supply of walkie-talkies is inelastic. 
B) the supply of walkie-talkies is elastic. 
C) the walkie-talkie supply curve will shift to the right. 
D) the walkie-talkie supply curve will shift to the left. 
A) the supply of walkie-talkies is inelastic. 
B) the supply of walkie-talkies is elastic. 
C) the walkie-talkie supply curve will shift to the right. 
D) the walkie-talkie supply curve will shift to the left.

Question 20

When the price of Starbucks coffee increased by 8 percent, the quantity demanded of Peet's coffee increased by 10 percent.Calculate the cross-price elasticity of demand between Starbucks coffee and Peet's coffee.What is the relationship between the two products?

Accepted Answer

The cross price elas

Briefly explain the economic concept of elasticity.

Which of the following items is likely to have the highest income elasticity of demand?

Table 6-6 -Refer to the Article Summary above.How would the NFL know if it was operating on the elastic portion of the demand curve for Super Bowl tickets?

Consider the following pairs of items: A.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then

Table 6-6 -Refer to Table 6-6.Based on the data in the table, between a price of $9.99 and $14.99, the demand for books is

Figure 6-10 -Refer to Figure 6-10.The supply curve on which price elasticity changes at every point is shown in

Which of the following items is likely to have the highest income elasticity of demand?

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is

The demand for most farm products is relatively inelastic.All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

Between 1950 and 2015, the number of acres devoted to wheat production in the United States and the price of wheat .

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

If an 8 percent decrease in the price of lobster leads to a 15 percent decrease in the quantity of lobster supplied, then the supply of lobster is

Suppose when the price of jean-jackets increased by 10 percent, the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

If the quantity of walkie-talkies supplied increases by 5 percent when price increases by 12 percent, then

When the price of Starbucks coffee increased by 8 percent, the quantity demanded of Peet's coffee increased by 10 percent.Calculate the cross-price elasticity of demand between Starbucks coffee and Peet's coffee.What is the relationship between the two products?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 6: Elasticity: the Responsiveness of Demand and Supply

Briefly explain the economic concept of elasticity.

Which of the following items is likely to have the highest income elasticity of demand?

Table 6-6 -Refer to the Article Summary above.How would the NFL know if it was operating on the elastic portion of the demand curve for Super Bowl tickets?

Consider the following pairs of items: A.shampoo and conditioner B.iPhones and earbuds C.a laptop computer and a desktop computer D.beef and pork E.air-travel and weed killer Which of the pairs listed will have a negative cross-price elasticity?

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then

Table 6-6 -Refer to Table 6-6.Based on the data in the table, between a price of $9.99 and $14.99, the demand for books is

Figure 6-10 -Refer to Figure 6-10.The supply curve on which price elasticity changes at every point is shown in

Which of the following items is likely to have the highest income elasticity of demand?

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is

The demand for most farm products is relatively inelastic.All else constant, what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

Between 1950 and 2015, the number of acres devoted to wheat production in the United States ________ and the price of wheat ________.

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

If an 8 percent decrease in the price of lobster leads to a 15 percent decrease in the quantity of lobster supplied, then the supply of lobster is

Suppose when the price of jean-jackets increased by 10 percent, the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

If the quantity of walkie-talkies supplied increases by 5 percent when price increases by 12 percent, then

When the price of Starbucks coffee increased by 8 percent, the quantity demanded of Peet's coffee increased by 10 percent.Calculate the cross-price elasticity of demand between Starbucks coffee and Peet's coffee.What is the relationship between the two products?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Between 1950 and 2015, the number of acres devoted to wheat production in the United States and the price of wheat .